TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 251
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case are that the Appellant, a Government of Tamil Nadu Undertaking is a registered service provider of supply of tangible goods service. During scrutiny of records of the Appellant, it was noticed that during the period 2007-08 to 201112 the Appellant had paid Protection and Indemnity fees to Steamship Mutual Underwriting Association (Bermuda) Limited, London, (SMUABL) which is a P&I Club, for covering third party liabilities. The Department formed an opinion that the services provided to the Appellant by the P & I Club located outside India for covering third party liabilities, was a service that was taxable under the extant General Insurance Service for which the Appellant was liable to pay service tax under reverse charge mechanism in terms of Section 66A. Accordingly, a Show Cause Notice (SCN) was issued demanding service tax payable for the period from April 2007 to March 2012. For the further period from April 2012 to June 2012 a similar demand was made by issuing a Statement of Demand (SOD), and both the SCN and the SOD so issued were adjudicated vide Order in Original dated 12.09.2014. Although the Appellant preferred appeals against the said OIO, subsequently, the App....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ainable. Ld. Counsel would argue that the Appellant being a Member of SMUABL, an incorporated Club, the finding was incorrect and is contrary to the principles laid down in the following judgements: (i) Commissioner of Central Excise and Service Tax CGST & Central Excise, Ahmedabad North Vs Rajpath Club Ltd, 2024 (6) TMI 1458 (Tri-Ahmedabad). (ii) Jubilee Hills International Centre Vs Commissioner of Central Excise and Service Tax, Hyderabad II, 2025 (6) TMI 1814 (Tri-Hyderabad) (iii) M/s Confederation of Indian Industry Vs Commissioner of Service Tax, 2024 (5) TMI 521 (Tri.-Kolkata). (iv) The Mondeal Retail Park Commercial Co-operative Service Society Ltd Vs Commissioner of Central Excise and Service Tax - CGST & Central Excise Ahmedabad (North), 2025 (4) TMI 105 (Tri. - Ahmedabad). (v) State of West Bengal Vs Calcutta Club Limited, (2019) 19 SCC 107. 5. Shri. M. Selvakumar, learned authorised representative appearing for the respondent, reiterated the findings of the learned appellate authority. 6. We have heard both sides, perused the appeal records and the citations submitted. 7. The sole issue that arises for determination ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e are applicable being squarely on the Revenue given that it is the Revenue's proposal to tax the appellant as such premised on SMUABL and the appellant being distinct persons and has not adduced any evidence in this regard; arguendo, even if the explanation 3 to Section 65B(44) were to be considered as applicable, as held in the impugned order, in light of the fact that the Appellant has filed copy of the document from the website of SMUABL indicating that the company was established by an Act of the Bermudian Legislature on 24th June, 1974, which remains uncontroverted. The Appellant has also produced a copy of the certificate of entry and acceptance pertaining to the appellant's vessel evidencing the contract of indemnity insurance between the Appellant and SMUABL and the terms that govern the appellant and the club in this regard. A copy of the invoice issued by SMUABL reflects that the payment for the standard Protection and Indemnity is characterized as "Mutual Premium." Thus, we find that the documents produced indicate that it is a truly mutual association that is member focused and thus the mutuality that is averred is also shown to be as asserted, and which is in any even....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e idea of clothing the agreement in a legal form. In the Oxford English Dictionary, Vol. II, at pp. 875 & 876, the word "constitute" is said to mean, inter alia, "to set up, establish, found (an institution, etc.)" and also "to give legal or official form or shape to (an assembly, etc.)". Thus the word in its wider significance, would include both, the idea of creating or establishing, and the idea of giving a legal form to, a partnership. The Bench of the Calcutta High Court in the case of R.C. Mitter and Sons v. CIT [(1955) 28 ITR 698, 704, 705] under examination now, was not, therefore, right in restricting the word "constitute" to mean only "to create", when clearly it could also mean putting a thing in a legal shape. The Bombay High Court, therefore, in the case of Dwarkadas Khetan and Co. v. CIT [(1956) 29 ITR 903, 907], was right in holding that the section could not be restricted in its application only to a firm which had been created by an instrument of partnership, and that it could reasonably and in conformity with commercial practice, be held to apply to a firm which may have come into existence earlier by an oral agreement, but the terms and conditions of the partners....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration:" 79. It will be noticed that the aforesaid explanation is in substantially the same terms as Article 366(29-A)(e) of the Constitution of India. Earlier in this judgment qua sales tax, we have already held that the expression "body of persons" will not include an incorporated company, nor will it include any other form of incorporation including an incorporated co-operative society. 80. It will be noticed that "club or association" was earlier defined under Section 65(25a) and 65(25aa) to mean "any person" or "body of persons" providing service. In these definitions, the expression "body of persons" cannot possibly include persons who are incorporated entities, as such entities have been expressly excluded under Section 65(25a)(i) and 65(25aa)(i) as "any body established or constituted by or under any law for the time being in force". "Body of persons", therefore, would not, within these definitions, include a body constituted under any law for the time bei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on members' clubs in the incorporated form. 85. The appeals of the Revenue are, therefore dismissed. Writ Petition (Civil) No.321 of 2017 is allowed in terms of prayer (i) therein. Consequently, show-cause notices, demand notices and other action taken to levy and collect service tax from incorporated members' clubs are declared to be void and of no effect in law." (emphasis supplied) 11. It is thus seen that the Hon'ble Apex Court, in para 80 of the Calcutta club case reproduced above, after noticing that "club or association" was earlier defined under Section 65(25a) and 65(25aa) to mean "any person" or "body of persons" providing service, has gone on to hold that in these definitions, the expression "body of persons" cannot possibly include persons who are incorporated entities, as such entities have been expressly excluded under Section 65(25a)(i) and 65(25aa)(i) as "any body established or constituted by or under any law for the time being in force". The Apex Court has in the said para 80 categorically held that "Body of persons", therefore, would not, within these definitions, include a body constituted under any law for the time being in force. 12. T....